Too much money printed in Belarus
22- 5.11.2010, 9:39
The macroeconomic policy of Belarus has deteriorated and become an expansive one, as stated by experts at the Minsk Forum.
“After the IMF programme finished in March this year, the economic conditions in Belarus were rather good and stable. Since then the macroeconomic policy has deteriorated. It has become very expansive. In the near term it would bring about positive results, increase efficiency of labor. However, in the next years inflation would grow. We are sure that in the nest year inflation will grow, and besides, there will be problems with efficiency of labor too”. It was stated by during the 13th Minsk Forum by Ricardo Giucci, a member of the German consultative group of economic reforms in Belarus, Ezhednevnik reports.
As said by him, despite of the fact that the Belarusian economy demonstrates rather good economic figures, the existing economic model should be changed. What disturbs the German economists?
Monetary policy
Too much money is printed in Belarus. As said by R. Giucci, monetary expansion by 80% a year is too much. “It is a too expansive monetary policy,” the expert said.
Massive increase of salaries of state employees by more than 30% would cause serious problems next year. “Salary hike is in general problematic from the point of view of economy development, as we have a trade balance deficit. In this situation salary hike would result in problems in international competition. That is why salaries should be held. When they are increased, it causes increase of a trade balance deficit.”
Balance of trade
As noted by Ricardo Giucci, a serious growth of negative balance of trade for the second year in a row is compensated not by a growth of foreign investments, but by the growth of foreign loans. As said by the German expert, this situation could be explained by the crisis, but to continue working under this model like the last two years is impossible. Eventually the debt will be so great that Belarus would not be able to service it. That is why trade balance deficit must be reduced, and financing should be made more healthy, with transition to direct invesrtments.
